New China-Pakistan trade route ‘could help deepen Islamabad’s ties with UAE’

Moazzam Ahmad Khan, who began his tenure as Pakistan’s envoy to Abu Dhabi at the end of August, says he wants to make ties between the two countries 'more diversified'

The Pakistan ambassador to the UAE, Moazzam Ahmad Khan, wants to strength ties with the Emirates through a major new trade route traversing Pakistan to China. Courtesy Pakistan embassy

ABU DHABI // Pakistan’s ambassador to the UAE said he aims to help deepen bilateral defence and economic ties, particularly through the major new trade route traversing Pakistan to China, the Asian power that is set to become the GCC’s largest trade partner.

“We really want to make this relationship more diversified, and deepen and expand it,” said Moazzam Ahmad Khan, who began his tenure as Islamabad’s envoy to Abu Dhabi at the end of August.

The China-Pakistan Economic Corridor, or CPEC, is being built by Beijing and will include rail, road and pipeline links from the Arabian Sea port of Gwadar to south-west China, as well as energy generation and other infrastructure. Key elements, such as a doubling of Pakistan’s electricity supply, are scheduled to be operational by 2020 – if all goes according to plan.

The corridor, described as a “game changer” by Pakistani officials, faces domestic political and security challenges, as well as opposition from India.

For Gulf countries seeking to strengthen their economic and strategic ties to Beijing, the primary benefit of CPEC is a 3,000 kilometre overland route for oil and gas exports to China, rather than the 12,000km sea journey currently being used. The majority of China’s growing demand for hydrocarbons is fed by Gulf producers, and Beijing is also keen to reduce the percentage of its energy imports that pass through the narrow Strait of Malacca, which lies between Malaysia and the Indonesian island of Sumatra. Eighty per cent of China’s overall energy imports currently travel via the Malacca choke point, something that Chinese officials consider a vulnerability.

CPEC is the cornerstone of Beijing’s “One Belt, One Road” initiative that seeks to link China through physical trade infrastructure to markets in Europe, the Middle East and the rest of Asia.

The UAE and other GCC countries are in fact looking to increase their investment and strategic relationships across Asia, as traditional western partners appear beset with rising populism that could tip them toward isolationism and a reduced regional role. And Islamabad hopes to benefit from these emerging dynamics.

Pakistan’s role as a geographic bridge to China for Middle Eastern, African and European markets enhances its geopolitical standing, but the hope is that the infrastructure surrounding the corridor and the expected boost it will give to domestic economic growth will also make the country a more attractive market for foreign investment. The UAE is Pakistan’s largest trade partner in the GCC, with total trade of US$7 billion (Dh25.7bn) per year, and Mr Khan said he hoped for increased investments in Pakistan by UAE investors.

“We would very much like the UAE to be part of it, and to benefit from this opportunity” in CPEC, Mr Khan said. However, there are concerns in the Gulf about the security of the corridor, which terminates at the Chinese-run Gwadar port in Balochistan, a province that has been plagued by nationalist, anti-Iranian and Islamist militancy.

“Security is the main element of ensuring that people benefit from this corridor, and the first thing we want to do is take care of security,” Mr Khan said. “And actually we have decided to base one division of troops that will just be responsible for the safety and security of this route.”

Pakistan has traditionally maintained close defence ties with GCC countries. As Gulf countries look to expand defence production as part of their economic diversification plans, and to diversify military relationships away from a reliance on the US, Mr Khan said Pakistan’s domestic defence industry is looking to play a role.

“We know that [the] UAE is very keen in indigenisation of their defence capabilities, and of course training, and there are several areas where I think Pakistan and the UAE can work together,” he said.

Pakistan and Turkey are reportedly already in talks with Doha about joint collaboration on defence production.

India is also stepping up its economic and strategic engagement with the GCC as it seeks to counter the influence of its rival China and adversary Pakistan. Like China, the Gulf is the main source of energy for India’s growing demand. New Delhi also hopes the Gulf will be an increasing source of foreign investment for Indian industries.

India is also building its own port and related transport infrastructure linking the Gulf to Central Asian markets at Chabahar in Iran. Given the GCC’s cold war-like relations with Tehran, however, it is unlikely that Gulf countries aside from Oman will utilise the rival trade corridor.

UAE-Pakistan bilateral ties dipped after Pakistan, along with Egypt, declined a request of the Saudi-led coalition to contribute to the military campaign against rebels in Yemen last year. It is unclear to what extent relations remain strained, but Mr Khan said he hoped “our friends would understand our limitations as to why we took the decision. It was a difficult decision”.

Since then, Pakistan has signed on to the Saudi-led alliance of Muslim-majority countries that Riyadh says is aimed at counter-terrorism. Pakistan’s navy is also part of the international maritime force patrolling the waters around Yemen, Mr Khan said.

“At the end of the day, stability and prosperity of this region is also in Pakistan’s interest,” Mr Khan added. “The relationship with the UAE is of course one that is anchored in a commonality of history, a commonality of faith, and a common view about the region.”